Equity Funds

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Equity funds or also called stock mutual funds are a special type of mutual fund wherein, the corpus accumulated through this fund is invested in stocks of public companies. The operation of the Equity Funds is regulated by the Association of the Mutual Funds of India (AMFI).

The operation of the Equity Funds is regulated by the Association of the Mutual Funds of India (AMFI). Further, the functions of the AMFI are being regulated by the Securities and Exchange Board of India more popularly known as SEBI.

With the opening up of the Indian economy post 1990s witnessed tremendous rise of the Indian financial sector, especially the capital market. The Ministry of Finance Government of India played an important role in the substantial growth of the Indian financial market. The regulatory of the capital markets of India were made more transparent and accountable in dealing with capital market transactions.

Definition and features of the Equity Funds:

Equity funds also known as stock mutual funds are a special type of mutual fund wherein, the corpus accumulated through this fund is invested in stocks of public companies. Holding of stocks or equity in a company means having part ownership or equity in that particular company. The main objective of holding stocks of a company is to reap profit on investment in such stocks after the company makes a profit in its business.

These stocks are generally classified as small, medium, and large sized stocks, which is further defined according to their individual market capitalization. The equity managers are trained professionals who format and pick stocks for investments. The formation of equity portfolios are generally made either by applying value-approach or by growth-approach. In the value-approach method the stocks with lesser value than its competitors are picked and in the growth-approach method the stocks with higher growth opportunity than its competitors or markets are picked for investments. In another type of approach, both the value and growth based stocks are picked for investments.

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Last Updated 06/30/2011

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